James Baker's Double Life (Page 5)

This is where the Carlyle/Albright consortium comes in. The premise of its proposal is that Iraq's unpaid debts to Kuwait are not just a financial problem but a political and public relations problem as well. Global public opinion is no longer what it was when Kuwait was promised full reparations. Now the world is focused on reconstructing Iraq and forgiving its debts. If Kuwait is going to get its reparations awards, the cover letter argues, it will need to recast them not as a burden on Iraq but "as a key element in working toward regional stability and reconciliation."

Several parties involved in the consortium emphasized that the proposal concerned only reparations debts. Albright Group spokesperson Jamie Smith said, "We were asked to join a proposal to secure justice for victims of Saddam's invasion of Kuwait and ensure that compensation to Kuwaiti victims--which was endorsed by the US government and the United Nations--be used to promote reconciliation, environmental improvements and investment in Kuwait, Iraq and the region."

In fact, the proposal does not restrict itself to reparations debt. The consortium also asks the government of Kuwait to give the consortium control over $30 billion in defaulted sovereign debts to be used as political leverage to secure reparations claims. Furthermore, most experts on debt restructuring agree that Iraq's debts must be looked at as a whole: There is little point forgiving Iraq's sovereign debts if the country is still going to be saddled with an unmanageable reparations burden. This understanding is reflected in the documents, which repeatedly state that Kuwait's reparations payments are endangered by the moves to forgive Iraq's debts.

To avert this threat to Kuwait, the consortium proposes a three-pronged strategy of aggressive backroom lobbying, clever public relations and creative investing and financing. "Any solution for payment of the Unpaid Awards...must be politically sellable as reinforcing stability and growth in the Gulf and in Iraq. This Proposal provides the strategy, the architecture, and the talent to achieve this goal," the document states.

Lobbying: Since the UNCC exists entirely at the discretion of the Security Council, which can vote to reduce, suspend or eliminate reparations at any time, the part of the proposal dealing with power-brokering is straightforward: It suggests a full-on lobbying offensive directed at Security Council members, using Albright's connections, but also other "eminent" people associated with the consortium like former US Senator Gary Hart and former US ambassador to the UN Jeane Kirkpatrick. "We will first seek to preserve the five percent of the revenues from Iraqi oil allocated as funding for payment of the UNCC awards," the proposal says. To achieve this, the consortium will make "discreet contacts at top levels in key capitals of Security Council member states and with influential representatives," and "interventions with United Nations senior staff to shape presentations to the Security Council." The proposal further notes that "Germany and Romania may be pivotal, and The Albright Group has very close ties to each."

Public Relations: The consortium also has a detailed plan to address the perception that reparations are "diverting resources from rebuilding Iraq to a more wealthy neighbor." First, Kuwait must assign its unpaid debts from Iraq to a private foundation controlled by the consortium. The foundation will manage an investment fund that will invest a portion of reparations payments from Iraq to Kuwait back into Iraq. As examples of the types of investments the foundation would make, Albright, Huebner and Sheikh suggest in their letter that the reparations funds could be used to buy Iraq's state-owned companies. "In the near future, 40 state-owned Iraqi enterprises in a range of sectors will be available for leasing and management contracts," they write. By demonstrating that Kuwait is investing part of its reparations proceeds back into Iraq's economy, the consortium-run foundation "establishes a humanitarian rationale for the United States and other countries to continue their support" for the reparations. The consortium appears to see privatization--a highly controversial proposal in Iraq--as part of a humanitarian mission.

The proposal also suggests more direct public relations strategies. It calls for Kuwait to dedicate $1 billion of the reparations awards it has already been paid by the UNCC to a Kuwait Environmental Restoration Fund, which the consortium would create. The purpose of this fund would be to remind the world of "the gravity of the environmental legacy facing Kuwait" and to "position Kuwait as the region's environmental leader." The fund would be headed by Carol Browner, former head of the US Environmental Protection Agency and a principal in the Albright Group.

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